The Swiss National Bank hands Credit Suisse a $54 billion lifeline, causing a sharp rebound in its stock and bonds, and bringing forth a sigh of relief from global equity markets. The European Central Bank has to decide whether or not it can afford to press ahead with its plans for a 50-basis-point hike in Eurozone interest rates. The Philadelphia Fed's business survey and weekly jobless claims will provide a cross-check against a significant weakening in retail sales and producer price inflation. FTX's new management says Sam Bankman-Fried and his friends drained over $3B from FTX - and that's before what they spent on U.S. politicians and luxury property in the Bahamas. And oil prices bounce off new lows. Here's what you need to know in financial markets on Thursday, 16th March.
Credit Suisse gets $54B lifeline
On Wednesday, Credit Suisse experienced a record one-day drop after its biggest shareholder, Saudi National Bank, announced that it would not commit more equity to the Swiss institution. However, on Thursday, the Swiss National Bank (SIX:SNBN) gave Credit Suisse a $54B credit line, which has shored up confidence in the battered lender. In a joint statement, the SNB and Swiss regulator FINMA said the bank has enough capital and liquidity to survive and said there should be no risk of contagion from the volatility seen in the U.S. banking sector over the last week. Credit Suisse (SIX:CSGN) stock almost completely reversed its record one-day drop it had made on Wednesday, bringing forth a sigh of relief from global equity markets. European stock markets also recovered, quelling fears of Credit Suisse infecting the rest of the European banking sector, but U.S. futures and Asian markets were still unimpressed.
ECB's dilemma
Credit Suisse's woes create an acute dilemma for the European Central Bank, which will release its latest policy decisions at 09:15 ET (13:15 GMT). The ECB had previously signaled an intention to raise its key rates by 50 basis points and to raise them further at subsequent meetings. At least, the second half of that guidance now seems moot. The big question is now whether it will go ahead as planned or pause its hikes to let the current volatility blow over, or steer a course between those two options with a 25 basis point hike. The ECB is boxed in: On the one hand, inflation is still running well above its 2% target, and its new forecasts are set to show it staying so for another two years. On the other, bank officials will be painfully aware of their mistake in hiking into the 2008 financial crisis, making it worse than it would otherwise have been.
Stocks inch down, unconvinced by CS rescue; Philly Fed, jobless claims and housing starts, all due
U.S. stock markets are set to open lower, with risk aversion still dominant ahead of the ECB's move. It appears the SNB's credit line for Credit Suisse won't be enough to calm nerves over the outlook for U.S. regional banks: First Republic (NYSE:FRC), PacWest Bancorp (NASDAQ:PACW), and Zions Bancorporation (NASDAQ:ZION) are all down heavily again in premarket trading, although losses are more modest at others that have come under pressure in recent days. By 06:45 ET, Dow Jones futures were down 117 points or 0.4%, while S&P 500 futures were down 0.3%. Nasdaq 100 Futures were slightly higher, however. Meta (NASDAQ:META) and Snap (NYSE:SNAP) continue to gain on news of the U.S. preparing
